Washington – Hillary Clinton’s plan to deal with the housing crisis is a frightening picture of the kind of damage she could inflict on the economy.
Her four-point plan is a mixture of draconian government controls and taxpayer bailouts. Specifically, her call for freezing foreclosures and interest rates demonstrates a total disregard for contracts and the rule of law. Such a move can only result in a future contraction of credit—exacerbating the problem we’re currently in. Lenders will surely shrink away from lending when they know the terms of their loans can be changed to their detriment at any moment by government whim.
To make matters worse, this plan will likely have a far-reaching effect on the behavior of all consumer lenders, not just mortgage lenders. Auto, credit card, even small business loans will become harder to obtain as lenders react rationally to the increased risk of government-induced loss.
Clinton’s plan is also patently unfair. Ninety-eight percent of all home mortgages are not in foreclosure. The vast majority of Americans chose not to buy a house they couldn’t afford, but Clinton’s plan would force these responsible homeowners to pick up the tab for the 2 percent of irresponsible homeowners. Her plan rewards the imprudent and punishes the prudent.
“Not only will Hillary’s four-point plan fail to solve the current economic crisis, it will likely wreak new havoc on the American economy,” said Club for Growth President Pat Toomey. “Instead of reassuring the market, brazen government controls, like freezing foreclosures and interests rates, will spread fear like a virus throughout the business world. Even those industries not directly affected by the plan will fear they will be next on Hillary’s hit list. Access to credit will shrink precisely when we need it to grow. Borrowers will be rewarded for acting irresponsibly, while taxpayers will be penalized for acting responsibly, setting a bad precedent down the road. Businesses, responsible borrowers, and taxpayers should be very frightened by this plan."